Will Uncle Sam bail out the airlines?

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Will Uncle Sam bail out the airlines?
Little support in Congress for industry assistanceBy Hampton Pearson
D.C. Correspondent
CNBC
Updated: 3:18 p.m. ET Sept. 13, 2004What role =97 if any =97 can the fede=
ral government play to help the airline industry pull out of its tailspin=
? Three years after the post-9/11 multibillion dollar bailout of the airl=
ine industry, Congress is in no mood for a repeat performance. =


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=93I don't think any bailout is going to come or financial assistance in =
the short term from Congress,=94 said Rep. John Mica (R- Fla.), Chairman =
of the House Aviation subcommittee =93The money isn't there. There's not =
support for it. I know they're hit by high fuel costs, but so are all the=
 other industries. So, they're going to have to do some additional cuttin=
g.=94

Some lawmakers are even more adamant, saying this is not the time to turn=
 back the clock on the 1978 decision to deregulate the airlines. Despite =
skyrocketing fuel costs, some airlines are making money.

  Related story =

Forbes.com: For airlines, it's still 9/11
 =

 =



=93We have five legacy major carriers who have lost $2 billion in the las=
t year and five start-ups, five low-cost carriers who have made $1 billio=
n,=94 said Mica. =93So, you can make money.=94

I don't think any bailout's going to come or financial assistance in the =
short term from Congress. The money isn't there.


=97 Rep. John Mica, R- Fla.
Chmn., House Aviation subcommittee  =

 =

Airline consultants say like it or not, bankruptcies will force the long =
overdue overhaul of industry cost structure.

=93We have very high costs still and very, very low revenue,=94 said Darr=
yl Jenkins, director of the George Washington University Aviation Institu=
te. =93This is not long-term sustainable. And over the next five years, w=
e will always have at least one or more of the major airlines in Chapter =
11. =93

But the government cannot stay on the sidelines. A second Chapter 11 bank=
ruptcy for US Airways puts at risk $900 million worth of federal loan gua=
rantees =97 granted in the 2002 bankruptcy.

United Airlines, now operating under bankruptcy protection, wants to defa=
ult on future pension obligations, which would put pressure on the govern=
ment pension insurance system. The Pension Benefit Guarantee Corporation =
is already about $11 billion dollars in the red and has asked the court t=
o block the move.  =


=93At the end of the day, is it going to bankrupt the government? No,=94 =
said Bradley Belt, executive director of the PBGC. =93But there is some r=
isk that if we don't address this, that the American taxpayer is going to=
 be called upon to bail out the pension insurance system, and that would =
be most unfortunate.=94

Meanwhile the FAA does have a five-year flight plan for helping the airli=
ne industry =97 mostly through encouragement of infrastructure improvemen=
ts to terminals and runways and the like. But that=92s for the long-term.=
 For the current financial turmoil hitting in the airlines industry, it i=
s very much survival of the fittest. =



Roger
EWROPS

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